| Chapter 2: | Poverty and the Knowledge Economy |
several approaches by which IGOs attempt to make this happen, including focusing broadly on economic growth and a more narrowly on human-capacity building. In order to study human-capacity building and higher education, it is essential to first understand poverty. Although the World Bank and other international and regional development banks consider poverty reduction their primary mission, poverty reduction is typically viewed by these same organizations as a byproduct of economic growth. Yunus (2003), however, noted that the assumption that economic prosperity will curtail poverty does not address the underlying issue. Indeed, the idea that economic growth contributes to the reduction of poverty has been criticized as a mutated version of trickle-down economics (Stiglitz 2002)—according to which, income is expected to eventually “trickle down” from the wealthy to the poor. In practice, however, this method allows for greater income inequality and in fact leads to an increase in poverty. In areas of India, for instance, economic growth resulting from development initiatives (e.g., building dams) has occurred in conjunction with an increase in poverty (Elkins 1992). Although the initiative's stated goal was to reduce poverty, the actual beneficiaries of the economic growth were few; instead, both economic inequality and poverty increased. In this example, poverty reduction was taken for granted as a byproduct of economic growth and was not treated as a primary goal. The actual outcome of economic growth was an increase in poverty—the opposite of the intended result. In order to re-envision poverty reduction as a primary goal instead of a byproduct, two things are necessary: an operational definition of poverty and an overview of poverty's global status.
Jeffrey Sachs, an economics professor at Columbia University and advisor to the United Nations, distinguished among three degrees of poverty measured by World Bank income standards: extreme, moderate, and relative. Extreme poverty, in which individuals cannot meet the basic needs of survival, often exists in developing countries (Sachs 2005). Chen and Ravallion used the World Bank statistical standards of income, according to which extreme poverty is experienced by those who live